AK Pipeline Operator to Pay $600K+ in Corrosion Case

Alyeska Pipeline Service Inc. will pay a $600,000 federal fine—far less than originally proposed—to settle several regulatory enforcement cases relating to failures, corrosion inspection issues, and other allegations involving the Trans Alaska Pipeline System (TAPS).

Under a settlement agreement signed this month with the Pipeline and Hazardous Materials Safety Administration (PHMSA), Alyeska admits nearly all of the violations and inadequate procedures alleged in two federal enforcement cases from 2007 and 2008. The fines in those cases had totaled $987,000.

Alyeska

Alyeska has previously faced federal-level questioning about its corrosion prevention measures along the 800-mile pipeline.

A 2006 case, for which Alyeska had already paid a $263,000 penalty, will stand. In addition, Alyeska agreed to drop a federal-court complaint it filed in 2010 over the 2006 fine, which had already been reduced from $350,000.

PHMSA withdrew one allegation from a 2009 case, and another violation remains under consideration; that case had carried a $43,800 fine.

Corrosion Control Program Ordered

The settlement also requires Alyeska to “develop and implement a risk-based atmospheric corrosion control program” for the 800-mile pipeline system and to complete other “appropriate corrective actions” that the agreement did not spell out.

Alyeska had appealed all four of the cases and, with the federal government only last month answering the complaint from the 2006 case, a lengthy appeal process was a certainty.

Allegations and Violations

The cases accused Alyeska of, among other things:

• Delay in obtaining a full report on a 2004 pig run to test for corrosion or other hazards;

• Failure to promptly repair a damaged segment of buried pipe;

• Failure to produce records for required atmospheric corrosion inspections in locations where regulators found water; and

• At least three pipeline failures, including a fire in the containment area of an oil storage tank; a 900-gallon oil spill; and a failed operation involving a “scraper pig,” used to clean the inside of a pipe, Petroleum News reported.

‘Cause for Concern’

Alyeska did not properly report the fire and did not follow its own policy, which requires keeping portable industrial heaters at least 25 feet away from any oil, gas or electric process facility, Petroleum News reported.

PHMSA said the failures raised “cause for concern regarding the operational integrity of TAPS.”

It also said that inspections along the pipeline had revealed deficiencies in Alyeska’s efforts to prevent corrosion. One case questioned Alyeska’s vigilance in using cathodic protection to fight corrosion and faulted the company’s record-keeping.

“We worked with PHMSA for several months to reach agreement,” Alyeska spokeswoman Michelle Egan told Petroleum News. She said the deal closes “all open matters” with the agency.

Corrosion Complaints

Stretching from Prudhoe Bay on Alaska’s North Slope to Valdez, the northernmost ice-free port in North America, the Trans Alaska Pipeline System is one of the longest in the world. The system has moved more than 16 billion barrels of oil since it began operation in 1977.

Alyeska—a consortium of oil companies led by BP—has previously tangled with federal regulators over corrosion monitoring and protection efforts. Early this year, a leak shut down the system for four days—the second-longest shutdown in its history.

Corrosion prevention and control is a critical focus of its operation and maintenance efforts, Alyeska says. Protective coatings are used throughout the system.